PROSPECTUS
TEMPLETON CAPITAL ACCUMULATION PLANS
Templeton Capital Accumulation Plans (the "Plans") for the accumulation of
shares of Templeton Capital Accumulator Fund, Inc. (the "Fund") are offered by
Franklin Templeton Distributors, Inc., the Sponsor and Principal Underwriter
("Distributors" or "Sponsor"). A Plan calls for fixed monthly investments for
15 years (180 investments), with the Planholder having the option to make
additional monthly investments for up to a total of 25 years (300 investments).
The ratio of Sales and Creation Charges to total investments on 15-year Plans
ranges from 9.00% on $9,000 Plans ($50.00 per month) to .75% on $1,800,000
Plans ($10,000 per month) and the ratio of Sales and Creation Charges to net
investments on 15-year Plans ranges from 9.89% to .76%. On Plans extended
to 25 years, the Sales and Creation Charges range from 8.50% (on $15,000
Plans) to .56% (on $3,000,000 Plans) of the net amount invested.
Investments under a Plan are applied, after authorized deductions, to the
purchase of Fund shares at net asset value. These shares should be considered a
long term investment and are not suitable for investors seeking quick profits or
who might be unable to complete a Plan. The Sales and Creation Charges for the
first year of a Plan can amount to 50% of the total amount paid during that
year. Since a major portion of the entire Sales and Creation Charge is deducted
from the first year's investments, withdrawal or termination of an investment in
the early years of a Plan will probably result in a loss. For example, on a
$9,000 Plan ($50.00 per month), deductions amount to 9.00% of the investments
made if the Plan is completed. However, even after the application of the refund
privilege described on page 8, total deductions would amount to 15% of total
investments if the Plan were terminated at any time between two months and 18
months. Moreover, if the Plan were continued for 19 months, total deductions
would amount to 33.82% of the total invested; deductions would amount to 28.04%
if the Plan were continued for two years and then redeemed. A detailed
description of all deductions appears on page 12.
The value of a Plan is subject to fluctuations in the value of the
securities in the Fund's portfolio. A Plan calls for monthly investments at
regular intervals regardless of the price level of the Fund's shares. Investors
should therefore consider their financial ability to continue a Plan. A Plan
offers no assurance against loss in a declining market. Terminating a Plan at a
time when the value of the shares then held is less than their cost will result
in a loss.
SHARES OF THE FUND ARE OFFERED TO THE GENERAL PUBLIC ONLY THROUGH TEMPLETON
CAPITAL ACCUMULATION PLANS. The Fund seeks long-term capital growth through a
flexible policy of investing in stocks and debt obligations of companies and
governments of any nation, developed or underdeveloped. As an operating policy,
which may be changed without shareholder approval, the Fund may not invest more
than 5% of its assets in lower rated debt securities. As a fundamental policy,
which may not be changed without shareholder approval, the Fund may not invest
more than 10% of its assets in illiquid securities, including defaulted debt
securities.
Shares of certain other mutual funds managed or advised by the Fund's
investment manager, Templeton Investment Counsel, Inc. ("TICI" or "Investment
Manager") and its affiliates, which have investment objectives similar in many
respects to those of the Fund, may be acquired with a sales charge for the
minimum initial investment of $100, and subsequent investments of a minimum of
$25 (which may be made automatically by means of pre-authorized bank debits),
and, compared to the earlier years of a Plan, would involve a lesser sales
charge, thereby decreasing the possibility of loss in the event of early
termination.
An investor has the right to a 45 day refund of his or her investment, as
well as certain other limited refund rights for certain periods of time and
under the conditions described in more detail under the heading "Cancellation
and Refund Rights" on page 8.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY
WHEN ACCOMPANIED BY THE
CURRENT PROSPECTUS OF
TEMPLETON CAPITAL
ACCUMULATOR FUND, INC.
Investors should read and retain this Prospectus for
future reference.
<PAGE>
TABLE OF CONTENTS
Introductory Statement..................................................... 3
Allocation of Investments and Deductions................................... 3
15-Year Plans - Allocation of Investments and Deductions................... 4
Total 25-Year Allocations and Deductions When Extended Investment
Option is Used........................................................ 4
A Typical $100 Monthly Investment Plan..................................... 5
Investment Objective - What You Seek From Your Plan........................ 5
How a Templeton Capital Accumulation Plan Can Help You Meet Your Objective. 6
How to Start Your Templeton Capital Accumulation Plan...................... 6
Automatic Investment Plan.................................................. 6
Your Rights and Privileges Under the Plan.................................. 6
Dividends and Distributions................................................ 6
How You Can Withdraw or Redeem Some of Your Shares Without Terminating
Your Plan............................................................. 7
Telephone Transactions..................................................... 8
You May Transfer or Assign Your Rights in the Plan......................... 8
Cancellation and Refund Rights............................................. 8
You May Terminate Your Plan and Withdraw Your Shares....................... 9
Replacement Privilege on Termination....................................... 9
You Retain Full Voting Rights in Your Fund Shares.......................... 10
You May Make Investments Ahead of Schedule to Complete Your Plan Early..... 10
You May Withdraw a Fixed Amount Monthly or Quarterly - When You Have
Completed Your Plan................................................... 10
You May Continue Investments After Completing a 15-Year Plan - Extended
Investment Option..................................................... 11
Individual Retirement Accounts (IRAs)...................................... 11
Tax-Sheltered Retirement Plans............................................. 11
Sales and Creation Charges................................................. 12
The Custodian - Templeton Funds Trust Company.............................. 13
The Sponsor - Franklin Templeton Distributors, Inc......................... 13
Taxes...................................................................... 14
Substitution of the Underlying Investment.................................. 14
Termination of Your Plan................................................... 15
General.................................................................... 15
Illustration of a Hypothetical $50.00 Monthly Templeton Capital
Accumulation Plan..................................................... 16
Financial Statements....................................................... 18
Templeton Capital Accumulation Plans....................................... 18
Franklin Templeton Distributors, Inc....................................... 23
Templeton Capital Accumulator Fund, Inc. Prospectus........................ P-1
No salesman, dealer or other person is authorized by the Sponsor, the Plans,
or the Fund, to give any information or make any representation other than those
contained in this Prospectus or in the prospectus and Statement of Additional
Information of Templeton Capital Accumulator Fund, Inc., or in any other printed
or written material issued under the name of Franklin Templeton Distributors,
Inc. or Templeton Capital Accumulator Fund, Inc. No person should rely upon any
information not contained in these materials.
PAGE
INTRODUCTORY STATEMENT
You should consider the following aspects of the Plans before making an
investment:
1. A Plan represents an agreement between you, the Sponsor, and Templeton
Funds Trust Company ("TFTC" or "Custodian") under which investments (after
deduction of "Sales and Creation Charges") are used to purchase shares of the
Fund. It is not required that the Sponsor notify you or seek your approval prior
to replacing the Custodian. However, the terms of the Custodian Agreement cannot
be amended to adversely affect your rights and privileges without obtaining your
written consent.
2. Investments made through the Plans will not constitute direct ownership
of Fund shares, but rather an interest in a trust which will have direct
ownership of Fund shares. You will have only a beneficial interest in the
underlying Fund shares. This beneficial interest is expressed in the Plan as
"Plan shares"; one Plan share always equals one share of the underlying Fund.
You will, however, retain full voting rights in the underlying Fund shares. The
Custodian will vote the shares held for your account in accordance with your
instructions.
3. Unlike most other plans of this type, the primary issuer-Templeton
Capital Accumulator Fund, Inc.-does not sell its shares directly to the public.
Investments in the Fund may be made only through the arrangements provided by
the Plans.
4. The Plans are available for purchase in conjunction with certain
Individual Retirement Accounts (IRAs), 403(b) custodial accounts ("403(b)
plans"), and qualified retirement plans. There is an annual service fee
(currently $10) for maintenance of an individual's IRA, 403(b), or qualified
retirement plan ("retirement plan accounts").
5. The Plans contain a Sales and Creation Charge which is sometimes called a
"front-end load." The effect of a "front-end load" is that if you terminate your
Plan between the second and eighteenth month, total deductions may amount to as
much as 15% of your total payments made up to that date. Accordingly, the Plans
are not suited for short-term investment. See the tables on page 4, and the
description thereof.
6. A Plan may be terminated by the Custodian or Sponsor if you fail to make
investments under your Plan for a period of 12 months or if Fund shares are not
available and a substitution is not made. See "Termination of Your Plan" on page
14. Planholders must be notified and approve any substitution of the Plan's
underlying investment.
See "Substitution of the Underlying Investment" on page 14.
7. The dealer firm of record has proprietary rights to all commissions
earned during the duration of your Plan. It is also under no obligation to
transfer your Plan to another dealer firm as long as its dealer agreement with
the Plan Sponsor, Franklin Templeton Distributors, Inc., remains active. If the
dealer firm of record chooses to release your Plan to a new dealer firm, it must
first complete, sign, and signature guarantee a release form that can be
obtained from the Plan Sponsor. This form must be returned to and accepted by
the Custodian, Templeton Funds Trust Company, before any dealer change can be
effected.
ALLOCATION OF INVESTMENTS AND DEDUCTIONS
The following tables show the range of available Plans, the Monthly
Investment Units to be made, total investments to be made and the Sales and
Creation Charges that will be charged as to each Monthly Investment Unit. The
total charges as a percentage of the total amount invested and as a percentage
of the net amount invested are also shown. This information is based solely on
investments made under a Plan and does not reflect any investment experience,
dividend or income of the Fund over the period of a Plan.
PAGE
15-YEAR PLANS
ALLOCATION OF INVESTMENTS AND DEDUCTIONS
<TABLE>
<CAPTION>
SALES AND CREATION CHARGES
% OF % OF
MONTHLY PER PER CHARGES CHARGES MONTHLY
INVESTMENT TOTAL INVESTMENT INVESTMENT TOTAL TO TOTAL TO NET INVESTMENT
UNIT INVESTMENT 1 THRU 12 13 THRU 180 CHARGES INVESTMENT INVESTMENT UNIT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50.00 $ 9,000.00 $25.00 $3.04 $810.72 9.0% 9.89% $50.00
75.00 13,500.00 37.50 4.55 1,214.40 9.0 9.89 75.00
100.00 18,000.00 50.00 6.07 1,619.76 9.00 9.89 100.00
125.00 22,500.00 62.50 7.58 2,023.44 8.99 9.88 125.00
150.00 27,000.00 75.00 7.50 2,160.00 8.00 8.70 150.00
166.66 29,998.80 83.33 8.15 2,369.16 7.90 8.57 166.66
200.00 36,000.00 100.00 9.46 2,789.28 7.75 8.40 200.00
250.00 45,000.00 125.00 11.42 3,418.56 7.60 8.22 250.00
300.00 54,000.00 150.00 6.96 2,969.28 5.50 5.82 300.00
350.00 63,000.00 175.00 6.92 3,262.56 5.18 5.46 350.00
400.00 72,000.00 200.00 6.62 3,512.16 4.88 5.13 400.00
500.00 90,000.00 225.00 6.96 3,869.28 4.30 4.49 500.00
750.00 135,000.00 300.00 10.31 5,332.08 3.95 4.11 750.00
1,000.00 180,000.00 350.00 13.57 6,479.76 3.60 3.73 1,000.00
1,500.00 270,000.00 375.00 19.82 7,829.76 2.90 2.99 1,500.00
2,000.00 360,000.00 440.00 20.00 8,640.00 2.40 2.46 2,000.00
3,000.00 540,000.00 450.00 28.92 10,258.56 1.90 1.94 3,000.00
5,000.00 900,000.00 500.00 20.53 9,449.04 1.05 1.06 5,000.00
10,000.00 1,800,000.00 750.00 26.78 13,499.04 .75 .76 10,000.00
</TABLE>
TOTAL 25-YEAR ALLOCATIONS AND DEDUCTIONS WHEN
EXTENDED INVESTMENT OPTION IS USED
<TABLE>
<CAPTION>
SALES AND CREATION CHARGES
% OF % OF
MONTHLY PER PER CHARGES CHARGES MONTHLY
INVESTMENT TOTAL INVESTMENT INVESTMENT TOTAL TO TOTAL TO NET INVESTMENT
UNIT INVESTMENT 1 THRU 12 13 THRU 300 CHARGES INVESTMENT INVESTMENT UNIT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50.00 $15,000.00 $25.00 $3.04 $1,175.52 7.84% 8.5% $50.00
75.00 22,500.00 37.50 4.55 1,760.40 7.82 8.49 75.00
100.00 30,000.00 50.00 6.07 2,348.16 7.83 8.49 100.00
125.00 37,500.00 62.50 7.58 2,933.04 7.82 8.49 125.00
150.00 45,000.00 75.00 7.50 3,060.00 6.80 7.30 150.00
166.66 49,998.00 83.33 8.15 3,347.16 6.69 7.17 166.66
200.00 60,000.00 100.00 9.46 3,924.48 6.54 7.00 200.00
250.00 75,000.00 125.00 11.42 4,788.96 6.39 6.83 250.00
300.00 90,000.00 150.00 6.96 3,804.48 4.23 4.41 300.00
350.00 105,000.00 175.00 6.92 4,092.96 3.90 4.06 350.00
400.00 120,000.00 200.00 6.62 4,306.56 3.59 3.72 400.00
500.00 150,000.00 225.00 6.96 4,704.48 3.14 3.24 500.00
750.00 225,000.00 300.00 10.31 6,569.28 2.92 3.01 750.00
1,000.00 300,000.00 350.00 13.57 8,108.16 2.70 2.78 1,000.00
1,500.00 450,000.00 375.00 19.82 10,208.16 2.27 2.32 1,500.00
2,000.00 600,000.00 440.00 20.00 11,040.00 1.84 1.87 2,000.00
3,000.00 900,000.00 450.00 28.92 13,728.96 1.53 1.55 3,000.00
5,000.00 1,500,000.00 500.00 20.53 11,912.64 .79 .80 5,000.00
10,000.00 3,000,000.00 750.00 26.78 16,712.64 .56 .56 10,000.00
</TABLE>
PAGE
A TYPICAL $100 MONTHLY INVESTMENT PLAN
(Assuming that all investments are made in accordance with the terms of the
Plan)
<TABLE>
<CAPTION>
AT THE END OF AT THE END OF AT THE END OF
6 MONTHS 1 YEAR 2 YEARS
AGGREGATE AMOUNT (6 INVESTMENTS) (12 INVESTMENTS) (24 INVESTMENTS)
------------------- ------------------- ----------------------------------------
% OF TOTAL % OF TOTAL % OF TOTAL % OF TOTAL
INVEST- INVEST- INVEST- INVEST-
AMOUNT MENTS AMOUNT MENTS AMOUNT MENTS AMOUNT MENTS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
15 Years (180 Investments)
Total Investments. $18,000 100% $600 100% $1,200 100% $2,400 100%
Deduct
Creation and Sales
Charge............ $1,619.76 9% $300 50% $600 50% $672.84 28%
Net Amount Invested
Under Plan........$16,380.24 91% $300 50% $600 50% $1,727.16 72%
25 Years (300 Investments
Total Investments. $30,000 100% $600 100% $1,200 100% $2,400 100%
Deduct
Creation and Sales
Charge............ $2,348.16 7.8% $300 50% $600 50% $672.84 28%
Net Amount
Under Plan........$27,651.84 92.2% $300 50% $600 50% $1,727.16 72%
NOTES:
</TABLE>
(1) Dividends and distributions received on Fund shares, during the periods
shown, have not been included or reflected in any way in the foregoing
figures.
(2) The 25-year investment schedule reflects the charges applicable to a
15-year Plan which is continued under the Extended Investment Option.
After the first 12 monthly investments have been made, the Creation and
Sales Charge deducted from any subsequent monthly investment will not exceed
6.1% of the net investment in Fund shares.
INVESTMENT OBJECTIVE-WHAT YOU SEEK FROM YOUR PLAN
As you will see in the attached prospectus, the objective of Templeton
Capital Accumulator Fund, Inc. (the "Fund") is long-term capital growth. The
Fund is an open-end, diversified investment company (usually referred to as
"mutual fund"). The Fund seeks to meet its objective through investment in
common stocks and other classes of securities which management believes will
contribute to the attainment of such investment objective. Accordingly,
selection of securities for the portfolio of the Fund is based almost entirely
on their potential capital growth possibilities. Most of the portfolio
securities will pay little, if any, income. Whatever income may be received will
be entirely incidental to the objective of capital growth. The Fund's
investments are selected and supervised by TICI. Reference is made to the
attached Templeton Capital Accumulator Fund, Inc. prospectus for a description
of the Fund's investment policies and operating expenses, and the business
experience of its management. A Statement of Additional Information about
Templeton Capital Accumulator Fund, Inc., which is incorporated by reference in
the prospectus for the Fund, is available at no charge by writing Franklin
Templeton Distributors, Inc., Dealer Main Office Services, 700 Central Avenue,
St. Petersburg, Florida 33701-3628 or by calling the Shareholder Services
Department at 1-800-632-2301.
HOW A TEMPLETON CAPITAL ACCUMULATION PLAN
CAN HELP YOU MEET YOUR OBJECTIVE
Many people who want to build an investment portfolio find it difficult to
save the money necessary to make periodic stock purchases. Templeton Capital
Accumulation Plans are designed to help such people.
These Plans make it possible to build equity over a period of years by
investing a modest sum each month in mutual fund shares. The mutual fund
principle is an attempt to reduce the risk inherent in any investment by
diversification and professional management.
The value of Plan shares is subject to the fluctuations in the value of the
securities in the Fund's portfolio. A Plan calls for monthly investments at
regular intervals regardless of the price level of the shares. You should
therefore consider your financial ability to continue a Plan. A Plan offers no
assurance against loss in a declining market and does not eliminate the risk
inherent in the ownership of any security. Terminating your Plan at a time when
the value of Plan shares you acquired is less than their cost will result in a
loss.
Other features of a Plan are the services rendered by the Custodian, which
performs certain bookkeeping and administrative services for the Plans. Acting
as your agent, the Custodian assumes the responsibility for many details of the
Plan. A description of the Custodian's services appears on page 12.
HOW TO START YOUR TEMPLETON CAPITAL ACCUMULATION PLAN
To start your Plan, complete the attached application and have your
investment dealer mail it to the Sponsor, together with a check made out to
Templeton Funds Trust Company. After your application is accepted by the
Sponsor, you will receive a confirmation statement showing the number of whole
and fractional shares purchased for your account.
You should then send investments in one or more multiples of the monthly
amount of your Plan directly to the Custodian. Investments, after applicable
deductions, will be applied toward the purchase of the Plan shares at the net
asset value. Investments in partial monthly amounts cannot be accepted, except
as identified in the discussion on Individual Retirement Accounts (page 10).
You may terminate your participation in the Plan, either completely or
partially, as provided on pages 7-8 ("How You Can Withdraw or Redeem Some of
Your Shares Without Terminating Your Plan") and page 9 ("You May Terminate Your
Plan and Withdraw Your Shares"). Any correspondence regarding the Plans should
be addressed to Franklin Templeton Distributors, Inc., Dealer Main Office
Services, 700 Central Avenue, St. Petersburg, Florida 33701-3628.
AUTOMATIC INVESTMENT PLAN
You may accumulate shares regularly each month by means of
automatic debits to your checking account. Forms for this purpose are in the
attached application. Such a plan is voluntary and may be discontinued by
written notice to the Sponsor, which must be received at least 10 days prior to
the collection date, or by the Sponsor upon written notice to you at least 30
days prior to the collection date.
YOUR RIGHTS AND PRIVILEGES UNDER THE PLAN
DIVIDENDS AND DISTRIBUTIONS
All dividends and distributions will be automatically reinvested on the
payment date in additional Plan shares at net asset value on the ex-dividend
date of the dividend or distribution, unless you elect to receive cash. All
dividends and distributions from retirement plan accounts which are not
reinvested are subject to federal income tax and, potentially, federal premature
distribution penalties if you are under age 59 1/2. Net asset value will be
calculated according to the method described in the Fund's prospectus under the
heading "How to Buy Shares of the Fund".
Dividends or distributions received shortly after an investment is made may
be considered a partial return of such an investment. Dividends and capital
gains, if any, will normally be paid by the Fund at least annually and generally
will be taxable to Planholders for income tax purposes. See "Taxes" on page 14.
The net asset value per share will decrease by the amount of the dividend
and capital gains distributions on the ex-dividend date of the distributions.
HOW YOU CAN WITHDRAW OR REDEEM SOME OF YOUR SHARES WITHOUT TERMINATING YOUR PLAN
While a redemption of all of your Plan shares will normally terminate your
Plan, you may redeem less than all of your shares without terminating the Plan.
If you have owned your Plan for at least 45 days, you may withdraw up to 90%
of your shares from your account or you may direct the Custodian, as your agent,
to redeem up to 90% of your shares and pay the proceeds to you. Any partial
redemption must involve at least $100 and cannot exceed 90% of the value of the
shares. Redemption requests that exceed 90% of the net asset value of the shares
and which leave less than $100 in the Plan will automatically result in a full
redemption of the entire balance in the Plan.
After a partial cash withdrawal, you may reinvest an amount equal to or less
than the amount withdrawn. Upon timely exercise of this reinvestment privilege,
your investment will be restored at the then current net asset value, at no
sales charge, as is prescribed by the National Association of Securities Dealers
("NASD"). Any repayment of a partial redemption cannot be made before 90 days
from the date of redemption except for IRAs, which can be restored after 45
days. (This allows the return of IRA assets before the 60-day Internal Revenue
Service ("IRS") deadline.) There is no limit to the number of redemptions that
can be made, each of which must be for a minimum of $100. Full reinstatement of
a partial redemption need not be made in one transaction if the amount redeemed
exceeds $500. However, any reinvestment must be equal to the amount redeemed or
at least $500, whichever is less.
Redemption or withdrawal of Plan shares held in a retirement plan account
must conform to the requirements of the retirement plan and the Plan's
withdrawal and redemption requirements. Distributions from such retirement plan
accounts are subject to additional requirements under the Internal Revenue Code
of 1986, as amended (the "Code"), and certain documents (available from the
Custodian) must be completed before the distribution may be made. Distributions
from retirement plan accounts are subject to withholding requirements under the
Code, and the IRS Form W-4P (available from the Custodian) may be required to be
submitted to the Custodian with the distribution request, or the distribution
will be delayed. The Custodian and the Sponsor assume no responsibility to
determine whether a distribution satisfies the conditions of applicable tax laws
and will not be responsible for any penalties assessed.
All requests for withdrawal must be made in writing and signed by all
registered Planholders. Proceeds of redemptions will be mailed to the address of
record unless instructions to the contrary are received with Planholders'
signatures guaranteed. In the case of a cash withdrawal, the Custodian or the
Sponsor may require additional documentation. Reinvested redemptions will be
applied to the purchase of Plan shares at the next determined net asset value.
No partial withdrawal or redemption shall affect the total number of monthly
investments to be made or the unpaid balance of monthly investments. No charge
will be made for each partial withdrawal, redemption or restoration, but you
will be liable for any transfer taxes that may be required. Replacements of
partial withdrawals must be clearly identified as such in order to distinguish
them from regular monthly investments. A gain or loss for tax purposes may be
realized by the Planholder upon any cash withdrawal.
Depending on your circumstances, the deduction for a loss may be limited.
If the cash withdrawal is more than $50,000, is made payable to an
individual other than the Planholder of record, or is to be sent to an address
other than the address of record, a letter of instruction will be required,
signed by all Planholders with signatures guaranteed by an "eligible guarantor,"
including (1) national or state banks, savings associations, savings and loan
associations, trust companies, savings banks, industrial loan companies and
credit unions; (2) national securities exchanges, registered securities
associations and clearing agencies; (3) securities broker-dealers which are
members of a national securities exchange or a clearing agency or which have
minimum net capital of $100,000; or (4) institutions that participate in the
Securities Transfer Agent Medallion Program ("STAMP") or other recognized
signature medallion program. A notarized signature will not be sufficient for
the request to be in proper order. A signature guarantee is not required for
cash withdrawals of $50,000 or less, if requested by and payable to
all Planholders of record, and to be sent to the address of record for that
account. However, the Sponsor reserves the right to require signature guarantees
on all cash withdrawals. A signature guarantee is required in connection with
most requestd for transfer of Plan shares. Also, a signature guarantee is
required if the Sponsor or the Custodian believes that a signature guarantee
would protect against potential claims based on the withdrawal instructions,
including, for example, when (a) the current address of one or more joint owners
of an account cannot be confirmed, (b) multiple owners have a dispute or give
inconsistent instructions to the Custodian, (c) the Custodian has been notified
of an adverse claim, (d) the instructions received by the Custodian are given by
an agent, not the actual registered owner, (e) the Custodian determines that
joint owners who are married to each other are separated or may be the subject
of divorce proceedings, or (f) the authority of a representative of a
corporation, partnership, association, or other entity has not been established
to the satisfaction of the Custodian. All documents must be in proper order
before any withdrawals or redemptions can be executed. The redemption price will
be the net asset value next determined after such documents have been received
in good order. Your request should be sent to Templeton Funds Trust Company,
P.O. Box 33030, St. Petersburg, Florida 33733-8030.
Ordinarily you will receive a check as a result of redeeming your shares
under this or any of the options described below within seven days after your
request is received by the Custodian. However, the Custodian will not mail
redemption proceeds until checks received for the shares purchased have cleared.
The payment period may be extended if the Custodian's right to redeem shares of
the Fund has been suspended or restricted. This will only happen if the New York
Stock Exchange is closed, other than for customary weekends or holidays, if
trading is restricted on the Exchange, or if any emergency is deemed to exist by
the Securities and Exchange Commission.
TELEPHONE TRANSACTIONS
If you have completed a Telephone Redemption Authorization Agreement (see
attached), you may initiate many transactions by phone. Please refer to the
sections of this prospectus that discuss the transaction you would like to make
or call Shareholder Services at 1-800/632-2301.
We may only be liable for losses resulting from unauthorized telephone
transactions if we do not follow reasonable procedures designed to verify the
identity of the caller. When you call, we will request personal or other
identifying information, and will also record calls. For your protection, we may
delay a transaction or not implement one if we are not reasonably satisfied that
telephone instructions are genuine. If this occurs, we will not be liable for
any loss.
If our lines are busy or you are otherwise unable to reach us by phone, you may
wish to ask your dealer for assistance or send written instructions to us, as
described elsewhere in this prospectus. If you are unable to execute a
transaction by telephone, we will not be liable for any loss.
YOU MAY TRANSFER OR ASSIGN YOUR RIGHTS IN THE PLAN
You may transfer your rights to another person; for example, a relative,
charitable institution, or trust. You can do this in several ways:
(1) You can transfer your right, title and interest to another person whose
only right shall be the privilege of complete and prompt withdrawal from the
Plan.
(2) You can transfer your entire right, title and interest to another
person, trustee or custodian acceptable to the Sponsor, who has made application
to the Sponsor for a similar Plan.
The Custodian will provide you with the appropriate assignment form.
Transfers may be subject to income and other taxes.
CANCELLATION AND REFUND RIGHTS
You have certain rights of cancellation. Within 60 days after you purchase a
Plan (which, for this purpose, is the date appearing on the confirmation
statement you will receive following your initial payment), the Custodian will
send a notice to you regarding your cancellation rights. If you elect to cancel
within 45 days of the mailing date of that notice, you will receive a cash
refund equal to the sum of (1) the total net asset value of the Plan shares
credited to your account on the date that your cancellation request is received
by the Custodian and (2) an amount equal to all sales and creation charges paid.
In addition, you may surrender your Plan at any time within an
eighteen-month period beginning from the date your first investment was made of
your Plan and receive from the Custodian a cash payment equal to the sum of (1)
the total net asset value of the Plan shares credited to your account on the
date of the surrender plus (2) a refund of all sales charges paid to the date of
surrender minus 15% of the gross amount you have invested as of that date. In
order to receive the above payment, your request should be sent in writing to
Templeton Funds Trust Company, P.O. Box 33030, St. Petersburg, Florida
33733-8030. In addition, a cancellation request involving more than $50,000 will
require a signature guarantee for all registered owners as described above.
If you surrender your Plan under this cancellation and refund privilege, you
may not reinstate your Plan at net asset value until all sales and creation
charges included in the redemption amount are first deducted from the reinstate-
ment amount. This requirement is more fully explained below in
"Replacement Privilege or Termination." In addition, under the so-called "wash
sale rule," Federal tax laws presently do not permit the recognition of a loss
when an individual sells and re-acquires the same securities within a 30-day
time period before or after the loss is incurred. Gains, however, are recognized
for tax purposes at the time of redemption.
The Custodian will send you a written notice of your eighteen-month rights
of cancellation if one or the other of the following occur:
(1) If, after fifteen months from the date of establishment, you have
missed three investments or more, or
(2) If you miss one investment or more after the expiration of the
fifteen-month period but prior to the expiration of the eighteen-month period.
(If the Custodian has already sent a notice at 15 months, a second notice will
not be required even if additional investments are missed.)
These notices will inform you of your rights of cancellation as set forth in
the preceding paragraph, of the value of your account at the time the notice is
sent, and of the amount to which you are entitled pursuant to the provisions of
the preceding paragraph.
YOU MAY TERMINATE YOUR PLAN AND WITHDRAW YOUR SHARES
A Plan may be terminated at any time by a written request to the Custodian.
In terminating your Plan, you may request the Custodian to withdraw your
shares, redeem them and send you the proceeds. If the amount of the redemption
is more than $50,000, is made payable to an individual other than the Planholder
of record, or is to be sent to an address other than the address of record, your
request, signed by all registered owners, must be signature guaranteed as
described above. All documents must be in good order before a redemption can be
executed. The redemption price will be the net asset value next determined after
such documents have been received.
If you choose to receive Fund shares instead of cash, the Plan shares may be
exchanged for shares of the Fund and then further exchanged for shares of
certain other funds for which TICI or an affiliate is the investment manager.
The Exchange Privilege is more fully described in the Fund prospectus under the
caption "May I Exchange Shares for Shares of Another Fund?." You should note
that if you elect to exchange your shares of the Fund for shares of other funds
in the Franklin Group of Funds (R) or the Templeton Funds, the shares of such
other funds cannot thereafter be exchanged back into shares of the Fund or in
your Plan.
The right of redemption of shares of the Templeton Capital Accumulation Plan
and the underlying Fund may be suspended at times when trading on the New York
Stock Exchange is restricted or such Exchange is closed for other than weekends
and holidays or any emergency is deemed to exist by the Securities and Exchange
Commission. As long as the right of redemption of shares of the Fund is
suspended, no shares may be redeemed, and therefore no cash withdrawal may be
made during that period.
REPLACEMENT PRIVILEGE ON TERMINATION
If you have terminated your Plan, you may exercise a replacement privilege
which allows you to reinvest an amount equal to but not less than 10% of the net
asset value of the redeemed shares without any sales charge in a re-opened
identically registered Templeton Capital Accumulation Plan. Reinvestment is made
at the net asset value per share next determined following the timely receipt by
the Custodian of a replacement order and payment. Replacement must be made
within 60 days following the date of termination of the Plan; however, while you
may be required to recognize a gain on a termination, you may not recognize a
loss for Federal tax purposes to the extent you reinvest the proceeds in a
Templeton Capital Accumulation Plan within 30 days or less.
The replacement privilege is available to you only if you have not
previously exercised the privilege as to your Plan. The replacement privilege
does not abrogate the partial withdrawal without termination privilege described
on pages 7-8. If you have redeemed your Plan shares under the procedures
described under "Cancellation and Refund Rights" on page 8, you may not
reinstate at net asset value the proceeds from such a cancellation or refund
until all refunded Sales and Creation Charges have been deducted from the amount
offered for the reinstatement.
YOU RETAIN FULL VOTING RIGHTS IN YOUR FUND SHARES
You will receive a notice at least 10 days before any matter is submitted to
a vote of the stockholders of the Fund. The Custodian will vote the shares held
for your account in accordance with your instructions. In the absence of such
instructions, the Custodian will vote your shares in the same proportion as it
votes the shares for which it has received instructions from other Planholders.
If you wish to attend any meetings at which shares may be voted, you may
request the Custodian to furnish you with a proxy or otherwise arrange for you
to exercise your voting rights.
YOU MAY MAKE INVESTMENTS AHEAD OF SCHEDULE TO COMPLETE YOUR PLAN EARLY
You may complete your Templeton Capital Accumulation Plan ahead of schedule
by making investments in advance of their due date, but not more than 24 monthly
investments may be made in one calendar year. In addition to such advance
investments, you may also prepay up to 24 monthly units at any time during the
life of your Plan. Monthly investment units may be accrued and paid in a lump
sum. There is no reduction in the Sales and Creation Charge for advance
investments. These prepayment rules shall be waived only to make a Plan that is
in arrears current (as defined in the section titled "You May Qualify for
Reduced Sales Charges" on page 12) or for the transfer or rollover into an IRA.
In the event of death of the Planholder, these advance investment
restrictions will be waived to allow the Plan to be completed at one time by
survivors of the Planholder or representatives of the estate.
YOU MAY WITHDRAW A FIXED AMOUNT MONTHLY OR QUARTERLY-WHEN YOU HAVE COMPLETED
YOUR PLAN
When you complete all regularly scheduled investments, you may elect a
Systematic Cash Withdrawal Program. Under this Program, the Custodian, as your
agent, will redeem sufficient shares from your account to provide regular cash
withdrawal payments of $50 or more each month or quarter, as you elect.
A Systematic Cash Withdrawal Program may be elected from an incomplete Plan
if the Plan is part of an IRA and you have reached age 59 1/2. Under this
program, the Custodian, as your agent, will redeem as of the twenty-fifth day of
each month (or the first business date after that date) sufficient shares from
your account to provide a regular cash withdrawal payment of $50 or more each
month or quarter, as you elect.
Except for the $50 minimum, there is no limitation on the size of your
withdrawals. The $50 amount is, however, only a minimum established for
administrative convenience and should not be considered as a recommendation. You
have the right to change the dollar amount of your withdrawal or discontinue
your Systematic Cash Withdrawal Program at any time.
You should realize that withdrawals in excess of dividends and distributions
will be made from principal and may eventually exhaust your account. For this
reason, these withdrawals cannot be considered as income on your investment.
Also, a gain or loss for tax purposes may be realized by you on each withdrawal
payment.
If you purchase two or more Plans, it is ordinarily disadvantageous to
participate in the Systematic Cash Withdrawal Program on a completed Plan while
still making regular payments on the uncompleted Plan. If you are participating
in a Systematic Cash Withdrawal Program, you should not start another Templeton
Capital Accumulation Plan. There are no charges made for any regular withdrawals
under a Systematic Cash Withdrawal Program.
The Plan will remain in full force and effect with all rights and privileges
until all shares have been withdrawn from your account. While the Systematic
Cash Withdrawal Program is in force, you may not elect to receive dividends and
distributions in cash.
While Distributors does not contemplate doing so, it reserves the right to
discontinue offering the Systematic Cash Withdrawal Program at any time after 90
days' notification to all Planholders who have not elected to participate in
such program. Those who are already participating will be allowed to continue.
YOU MAY CONTINUE INVESTMENTS AFTER COMPLETING A 15-YEAR PLAN-EXTENDED
INVESTMENT OPTION
Under the Extended Investment Option, you may continue making monthly
investments after completing all scheduled investments in your 15-year Plan.
Investments under this option are subject to the same sales charges as applied
to your last scheduled investment.
If under this option you fail to make regularly scheduled investments for
six consecutive months, after being credited for any advance made under the
option, you forfeit your right to make such additional investments. All Extended
Investment Options will terminate on the date the 300th monthly investment is
made under your Plan.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Under current tax laws you may be eligible to establish an IRA. An IRA
Agreement is available through Franklin Templeton Trust Company (Trust
Company), an affiliate of TFTC. The Agreement provides for investments in the
Plans. It also provides that Trust Company shall furnish custodial services
to the participant for service fees chargeable to the participant. Trust
Company presently deducts an annual service fee of $10.00 for maintenance
of the account, unless it is paid separately. Trust Company is qualified
under IRS regulations to act as an IRA custodian.
An individual may initiate an account by executing the IRA Application and
by making the initial Plan investment. Under current law, a participant's
maximum annual contribution is limited to the lesser of 100% of compensation or
$2,000. If a second account is established with a non-working spouse the total
contribution for both accounts would be a maximum of $4,000. Contributions to an
IRA by an ndividual who participates, or whose spouse participates, in a
tax-qualified or government-approved retirement plan may or may not be
deductible depending on their income. Contributions in excess of these limits,
premature distributions, and/or insufficient withdrawals after age 701/2 may
result in substantial adverse tax consequences. "Rollover contributions," as
defined in IRS regulations, are also allowed.
In addition to the regular monthly investment schedules, you may once each
year invest an odd amount not equal to the monthly plan amount in order to
complete exact contributions totals authorized by the IRS for the IRA being
used. Such odd amounts should be specifically identified to the Custodian, when
forwarded, in order to prevent rejection. Odd amounts, not in exact multiples of
the monthly investment unit, will be accepted for all rollovers and transfers
into IRAs.
All contributions are invested on the day of receipt by the Custodian. If
revocation of the account is requested in writing within seven days after
payment of an initial contribution, the individual will receive the greater of
the net asset value of his account (including the Sales and Creation Charge) or
the amount contributed.
TAX -SHELTERED RETIREMENT PLANS
A Plan may be purchased by individuals who wish to establish tax-sheltered
retirement plans, including custodial accounts under Section 403(b) of the Code
(403(b) accounts) and qualified retirement plans under Section 401(a) of the
Code (QRPs). Trut Company may serve as either trustee or custodian for such
plans. Trust Company currently charges an annual service fee of $10.00 for
maintenance of each 403(b) account or QRP. QRPs may only be established if the
dealer is not considered a fiduciary, as that term is defined in Section 3(21)
of the Employee Retirement Income Security Act of 1974.
Should you establish a Plan in a 403(b) account or QRP, you will likely
release any cancellation and refund rights that you may have (see page 8)
because of the withdrawal restrictions of the 403(b) account or QRP. In order to
establish a 403(b) account or QRP, you will be required to sign a form, supplied
by your dealer, acknowledging the restrictions on your cancellation and refund
rights.
SALES AND CREATION CHARGES
The Sponsor receives a Sales and Creation Charge to compensate it for
creating your Plan and for selling expenses and commissions to dealers, which is
deducted from each investment. For example, on a $100 a month Plan, $50 is
deducted from each of the first 12 monthly investments. After the 12th payment,
the charge drops to $6.07 on each subsequent monthly investment. Deductions
decrease proportionately on certain larger plans. See "Allocation of
Investments and Deductions" on page 3.
PURCHASING TWO OR MORE PLANS
The face amounts of two or more Plans purchased at one time by "any person"
may be combined to take advantage of the lower Sales and Creation Charges
available on large purchases.
The term "any person" includes an individual, his or her spouse, their
children under the age of 21 and their grandchildren under age 21 who are
beneficiaries of a Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act account in which the Planholder serves as custodian, or a trustee or other
fiduciary of a single trust estate or single fiduciary account (including a
pension, profit-sharing or other employee benefit trust created pursuant to a
Plan qualified under Section 401 of the Code). To qualify for these savings, all
of the applications for the Plans involved must be submitted simultaneously with
a covering letter requesting that the face amount of such Plans be combined for
the purpose of determining the applicable Sales and Creation Charge as shown on
page 4.
In the event investments are discontinued on one or more of the Plans which
have been combined under the foregoing provisions, the remaining Sales and
Creation Charge for the Plans that are continued will be changed to reflect the
charges applicable to such Plans.
YOU MAY QUALIFY FOR REDUCED SALES CHARGES
When purchasing any new Plan(s) or increasing the face amount of any
existing Plan(s), "any person" as defined above may qualify for a reduced sales
charge on the new purchase by combining the face amount of any existing Plan(s)
on which investments are current with the face amount of the new purchase. A new
purchase includes the face amount of new Plans and the face amount of Plans on
which an increase in Plan size is requested. For rights of accumulation, a Plan
is considered to be current if: (1) it has been completed and not redeemed; (2)
it has not been completed but has at least as many investments recorded as there
are months since the establishment date or since a plan size increase date; or
(3) it is a tax qualified plan or an IRA. Further spousal IRA Plans at $166.66
per month may become eligible for lower sales charges if such Plans are included
as part of the basis for reduced sales charges on new Plans or Plan size
increases on existing Plans. In addition, the Sponsor must be notified by the
dealer or the purchaser at the time of the placing of the order that the
purchaser qualifies for the reduced Sales and Creation Charge.
CHANGING THE FACE AMOUNT OF YOUR PLAN
The face amount of your Plan may be changed under the following
circumstances:
(1) The face amount of a Plan may be increased at any time, provided the new
Plan size is a denomination offered.
(2) The face amount of a new Plan may be decreased by 50% within six months
of the commencement of your original Plan or within six months following a face
amount increase on an existing Plan. If a decrease is to occur on an existing
Plan, the decrease cannot retreat lower than the original Plan from which the
increase occurred. Both increases and decreases can be made by a written notice
to the Sponsor, accompanied by a new completed Plan application. The Sales and
Creation Charges already paid on the existing Plan will be recomputed to reflect
a new Plan denomination.
The Sales and Creation Charges already paid on the existing Plan will be
credited to the Sales and Creation Charge applicable to the new denomination.
Excess Sales and Creation Charges will be invested at net asset value on the day
the change occurs while amounts still due will be deducted as an expense to the
new Plan account.
THE CUSTODIAN-TEMPLETON FUNDS TRUST COMPANY
THE PLAN
The organization, management and investment policies of Templeton Capital
Accumulator Fund, Inc. are fully described in the attached Fund prospectus and a
Statement of Additional Information which is available on request from the
Sponsor. If practicable, shares of the Plan are credited to accounts at net
asset value after applicable deductions are made on the date the Custodian
receives Plan investments.
Dividends and distributions received on Plan shares will be reinvested by
the Custodian in additional Plan shares at the then current net asset value,
unless you elect to receive cash.
THE PLAN CUSTODIAN-THE THIRD PARTY WORKING TO RELIEVE YOU OF THE DAY-TO-DAY
DETAILS OF INVESTING
Templeton Funds Trust Company, organized as a trust company under the laws
of the State of Florida, is the Custodian for the Plans under a Custodian
Agreement with the Sponsor dated June 1, 1993 and maintains custody of the
assets of the Plans. The Plan Custodian Agreement is governed by Florida law,
except in the event, and to the extent, that such law is determined to conflict
with the Investment Company Act of 1940.
Investments under your Plan should be payable to and sent to the Custodian.
After making authorized deductions, the Custodian applies the remaining balance
to the purchase of Plan shares. The Custodian holds these shares in its custody,
receiving dividends and distributions which are automatically reinvested in
additional Plan shares at no charge, unless you elect to receive cash.
The Custodian has assumed only those obligations specifically imposed on it
under its Custodian Agreement with the Sponsor. These obligations do not include
the duties of investment ordinarily imposed upon a trustee. The Custodian has no
responsibility for the choice of the underlying investment, for the investment
policies and practices of the Fund or for the acts or omissions of the Sponsor
or the Investment Manager.
The Custodian Agreement cannot be amended to adversely affect the rights and
privileges of the Planholders without their written consent. Neither may the
Custodian resign unless a successor has been designated and has accepted the
Custodianship. Such successor must be a bank or trust company having capital,
surplus and undivided profits totaling at least $2,000,000. The Custodian may be
changed without notice to, or approval of, Planholders. The Custodian may
terminate its obligation to accept new Plans for custodianship if the Sponsor
fails to perform certain activities it is required to perform under the
Custodian Agreement or if the Custodian terminates the Agreement upon 90 days'
notice to the Sponsor. The Custodian Agreement provides that the Sponsor shall
indemnify and hold the Custodian harmless from all liability which may arise
from the failure of the Sponsor to comply with any law, rule, regulation, or
order of the United States, any state, or other jurisdiction relating to the
sale, registration, or qualification of securities.
THE SPONSOR-FRANKLIN TEMPLETON DISTRIBUTORS, INC.
The Sponsor, a New York corporation organized on November 19, 1947, is a
wholly owned subsidiary of Franklin Resources, Inc. It is a broker-dealer
registered under the Securities Exchange Act of 1934 and a member of the NASD.
The Sponsor is the principal underwriter of the investment companies in the
Franklin Group of Funds (R) and the Templeton Funds. The following sets forth
the directors and executive officers of the Sponsor:
Charles B. Johnson, Director and Chairman of the Board, is Director,
President and Chief Executive Officer of Franklin Resources, Inc. ("Franklin
Resources") and Director and Chairman of the Board of Franklin Advisers, Inc.
("Franklin Advisers").
Gregory E. Johnson, President, is Vice President of Franklin Advisers.
Rupert H. Johnson, Jr., Director and Executive Vice President, is Director
and Executive Vice President of Franklin Resources, Director and President of
Franklin Advisers, and Director and Chairman of the Board of Franklin
Management, Inc. ("Franklin Management").
Harmon E. Burns, Director and Executive Vice President, is Director,
Executive Vice President and Secretary of Franklin Resources and Executive Vice
President of Franklin Advisers.
Kenneth V. Domingues, Senior Vice President, is Senior Vice President of
Franklin Resources and Franklin Advisers.
Kenneth A. Lewis, Treasurer.
Loretta Fry, Vice President, is Vice President-Operations of Franklin
Resources and Vice President of Franklin Advisers.
Deborah R. Gatzek, Senior Vice President and Assistant Secretary, is Senior
Vice President and Assistant Secretary of Franklin Resources and Vice President
and Assistant Secretary of Franklin Advisers.
Charles E. Johnson, Senior Vice President, is Director and Senior Vice
President of Franklin Resources and Vice President of Franklin Advisers.
Leslie M. Kratter, Secretary, is Vice President and Assistant Secretary of
Franklin Resources and Secretary of Franklin Advisers and Franklin Management.
Richard C. Stoker, Senior Vice President, is Vice President of Franklin
Management.
Philip J. Kearns, Vice President, is Vice President of Franklin Agency, Inc.
Jack Lemein, Vice President, is Senior Vice President of Franklin Advisers
and Vice President of Franklin Management.
Harry G. Mumford, Jr., Vice President, is Executive Vice President of
Franklin Institutional Services Corporation.
Vivian J. Palmieri, Vice President, is Vice President of Franklin Advisers.
Other Senior Vice Presidents of the Sponsor include Edward V. McVey,
Peter D. Jones and Daniel T. O'Lear.
Other Vice Presidents of the Sponsor include, James K. Blinn, Richard O.
Conboy, Jimmy A. Escobedo, Robert N. Geppner, Mike Hackett, Ken Leder, John R.
McGee, Kent P. Strazza, Bert W. Feuss, Sarah Stypa.
All officers and employees of the Sponsor are covered by a blanket bond in
the amount of $130,000,000.
TAXES
For Federal income tax purposes, Planholders are treated as directly owning
the Fund's shares. Designated capital gain distributions, which are
automatically reinvested in additional shares, are treated as long-term capital
gains. The tax cost of the shares acquired is the amount paid for those shares,
including the Sales and Creation Charge.
As more fully described under "Federal Tax Information" in the prospectus of
the Fund, dividends and distributions are taxable to you individually. Gains
realized on cash withdrawals also generally will be subject to tax; the ability
to deduct losses from such withdrawals may be limited. An appropriate notice
regarding taxes will be sent to you each year.
Any taxes payable with respect to any of the profits realized on sales or
transfers by the Custodian or the Sponsor of Plan shares or other property
credited to your account in accordance with the provisions of your Plan and any
taxes levied or assessed with respect to Plan shares or the income therefrom
shall be borne by you individually and not by the Custodian or the Sponsor.
SUBSTITUTION OF THE UNDERLYING INVESTMENT
The Sponsor may substitute the shares of one other investment medium as the
underlying investment if it deems such action to be in the best interests of
Planholders. Such substituted shares shall be generally comparable in character
and quality to the present Fund shares, and shall be registered with the
Securities and Exchange Commission under the Securities Act of 1933. Before any
substitution can be effected, the Sponsor must:
(1) obtain an order from the Securities and Exchange Commission approving such
substitution under the provisions of Section 26(b) of the Investment Company
Act of 1940, as amended;
(2) give written notice of the proposed substitution to the Custodian;
(3) give written notice of the proposed substitution to each Planholder, giving
a reasonable description of the new fund shares, with the advice that,
unless the Plan is surrendered within 30 days of the date of mailing such
notice, the Planholder will be considered to have consented to the
substitution and to have agreed to bear his pro rata share of expenses and
taxes in connection with it; and
(4) provide the Custodian with a signed certificate stating that such notice has
been given to Planholders.
If your Plan account is not surrendered within 30 days from the date of such
notice, the Sponsor shall purchase the new shares for your account with the
proceeds of any Plan payments and any dividends or distributions which may be
reinvested for your account. If the new shares are also to be substituted for
the shares already held, the Sponsor must arrange to have the Custodian
furnished, without payment of a sales charge or fees of any kind, with new
shares having an aggregate value equal to the value of the shares for which they
are to be exchanged. A substitution may be a taxable event for Planholders.
If the Fund shares are not available for purchase for a period of 120 days
or longer, and the Sponsor fails to substitute other shares, the Custodian may,
but is not required to, select another underlying investment. If the Custodian
selects a substitute investment, it shall first obtain an order from the
Securities and Exchange Commission approving such substitution as specified
above and then shall notify the Planholder, and if, within 30 days after mailing
such notice, the Planholder gives his written approval of the substitution and
agrees to bear his pro rata share of actual expenses, including tax liability
sustained by the Custodian, the Custodian may thereafter purchase such
substituted shares. The Planholder's failure to give such written approval
within the 30-day period shall give the Sponsor the authority to terminate the
Plan.
If the Fund shares are not available for purchase for a period of 120 days
or longer, and neither the Sponsor nor the Custodian substitutes other shares,
the Custodian shall have authority, without further action on its part, to
terminate the Plan.
TERMINATION OF YOUR PLAN
Although your Plan may call for regular investments over a 15-year period,
neither the Sponsor nor the Custodian can elect to terminate your Plan until 300
investments have been made unless it has been in default for more than six
months or unless shares of the Plan are not obtainable and a substitution is not
made.
The period of default will not start until you have been given full credit
for a period equal to the amount of any advance investments you have made. Under
current policies, for all Plans established subsequent to January 1, 1995, only
one investment is required during each six month period to prevent your Plan
from being terminated. For Plans in existence prior to January 1, 1995, only one
investment is required during each 12-month period to prevent your Plan from
being terminated.
After 300 investments, or if other events justify termination, the Sponsor
or the Custodian has the right to terminate your Plan 60 days after mailing a
written notice to you.
On termination, the Custodian (as your agent) may surrender for liquidation
all of the Plan shares credited to your account, or sufficient Plan shares to
pay all authorized deductions and leave no fractional shares. The shares and/or
cash, after paying all authorized deductions, will be held by the Custodian for
delivery to you against the surrender of your Plan.
No interest will be paid by the Custodian on any such cash balances. If the
Plan is not surrendered within 60 days after the notice of termination, the
Custodian, at its discretion, may at any time thereafter fully discharge its
obligations by mailing the shares or its check, drawn in accordance with the
terms of your account, to the address noted in the account. You will then have
no further rights under the Plan except that if the check or shares are returned
to the Custodian undelivered, the Custodian will continue to hold these assets
for the benefit of your account, subject only to escheat laws.
GENERAL
The Plan is considered to be a unit investment trust under the Investment
Company Act of 1940, and is so registered with the Securities and Exchange
Commission. Such registration does not imply supervision of management or
investment practices or policies by the Commission.
Commissions ranging from 75% to 95% of the total Sales and Creation Charges
will be paid to authorized investment brokers and mutual fund dealers who are
members of the NASD, and who have executed a dealer's agreement with the
Sponsor. The Sponsor, acting as Principal Underwriter, may from time to time pay
a bonus or other incentive to dealers which employ registered representatives
who sell a specified minimum dollar amount of the Plans and/or of certain other
mutual funds managed by the Investment Manager and its affiliates during a
specified period of time. Such bonus or other incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and members of their
families to places within or without the United States. In no event will the
value of such bonus or incentive paid by the Sponsor to the dealer exceed the
difference between the Sales and Creation Charges and the amount reallowed to
dealers in respect of such amounts sold by the qualifying registered
representative of such dealer. A dealer receiving such bonus or incentive may be
deemed to be an "underwriter" under the Securities Act of 1933. These dealers
and investment brokers are independent contractors. Nothing herein or in other
literature and confirmations issued by the Sponsor or the Custodian, including
the words "representative" or "commission," shall constitute any broker-dealer
or investment broker a partner, employee or agent of the Sponsor or the
Custodian. Neither the Sponsor nor the Custodian shall be liable for any acts or
obligations of any such dealer or investment broker.
Plans are offered in all states where it is lawful to do so.
ILLUSTRATION OF A HYPOTHETICAL $50.00 MONTHLY TEMPLETON CAPITAL
ACCUMULATION PLAN WITH INCOME DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
REINVESTED IN ADDITIONAL SHARES
The table below covers the period from March 29, 1991 to August 31, 1996
<TABLE>
<CAPTION>
AMOUNT OF PAYMENT AMOUNT INVESTED
---------------------- ----------------------
FISCAL DURING SALES DURING SHARES SHARES PURCHASED TOTAL TOTAL
PERIOD FISCAL CUMULATIVE CHARGES(A) FISCAL CUMULATIVE PURCHASED THROUGH SHARES VALUE
ENDED PERIOD PERIOD RE-INVESTMENT PURCHASED OF SHARES
- ----------- ----------- ---------- --------- ----------- ---------- --------- ----------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8/31/91(b) $300.00 $ 300.00 $150.00 $150.00 $150.00 14.755 - 14,755 $ 153.75
8/31/92 600.00 900.00 184.14 415.86 565.86 39.637 0.330 54,722 599.21
8/31/93 600.00 1,500.00 36.48 563.52 1,129.38 47.983 1.666 104,371 1,436.14
8/31/94 600.00 2,100.00 36.48 563.52 1,692.90 37.528 2.412 144,311 2,339.28
8/31/95 600.00 2,700.00 36.48 563.52 2,256.42 36.834 7.368 188,513 3,004.90
8/31/96(c) 600.00 3,300.00 36.48 563.52 2,819.94 65.964 8.156 451,146 4,096.41
</TABLE>
(a) Under the terms of this Plan, out of a monthly investment of $50.00 made
during the first year of the Plan, $25.00 is deducted as a sales charge.
Thereafter, the sales charge on such amount is reduced to $3.04.
(b) Period from March 29, 1991 (commencement of operations) through August 31,
1991.
(c) Includes the effect of a 2 for 1 split on March 27, 1996.
PAGE
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Franklin Templeton Distributors, Inc., Sponsor
and the Planholders of Templeton
Capital Accumulation Plans
We have audited the accompanying statement of assets and liabilities of
Templeton Capital Accumulation Plans as of August 31, 1996 and the related
statements of operations and changes in net assets for each of the three years
in the period then ended. These financial statements are the responsibility of
the management of the Plan's Sponsor. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation from the custodian of shares of Templeton Capital Accumulator Fund,
Inc. held for planholders as of August 31, 1996. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Templeton Capital
Accumulation Plans as of August 31, 1996, and the results of its operations and
the changes in its net assets for the periods indicated, in conformity with
generally accepted accounting principles.
/s/MCGLADREY & PULLEN
New York, New York
October 4, 1996
PAGE
TEMPLETON CAPITAL ACCUMULATION PLANS
FOR THE ACCUMULATION OF SHARES OF
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996
ASSETS:
Templeton Capital Accumulator Fund,
Inc. shares, at value (average cost, $88,131,415)............ $106,572,427
LIABILITIES: -
NET ASSETS:
Net assets (equivalent to $9.08 per
share based on 11,739,637 Plan shares held
for outstanding Plans)...................................... $106,572,427
STATEMENTS OF OPERATIONS
YEARS ENDED AUGUST 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Investment income:
Distributions received on shares of Templeton
Capital AccumulatorFund Inc. from:
Net investment income................................... $1,313,090 $503,913 $205,500
Realized gains.......................................... 284,137 1,511,116 266,694
------- --------- -------
$1,597,227 $2,015,029 $472,194
---------- ---------- --------
Expenses (Note 3).......................................... - - -
-- -- --
Net investment income....................................... $1,597,227 $2,015,029 $472,194
---------- ---------- --------
Realized and Unrealized Gain on Investments:
Net realized gain on complete and partial
terminations, including Fund
Shares withdrawn at market value............................ $721,621 $205,940 $343,272
Unrealized appreciation during the period................... 10,423,640 217,321 4,284,121
---------- ------- ---------
Net gain on investments..................................... $11,145,261 $423,261 $4,627,393
----------- -------- ----------
Net increase in net assets from operations.................. $12,742,488 $2,438,290 $5,099,587
=========== ========== ==========
</TABLE>
See Notes to Financial Statements.
PAGE
TEMPLETON CAPITAL ACCUMULATION PLANS
FOR THE ACCUMULATION OF SHARES OF
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended August 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Increase (decrease) in net assets from:
Operations:
Net investment income................................ $1,597,227 $2,015,029 $472,194
Net realized gain on Plan terminations............... 721,621 205,940 343,272
Unrealized appreciation for the period............... 10,423,640 217,321 4,284,121
---------- ------- ---------
Net increase in net assets from operations........... 12,742,488 2,438,290 5,099,587
Distributions to planholders.........................(1,597,227) (2,015,029) (472,194)
Transactions in Fund shares (Note 2)................. 30,868,787 26,322,220 15,029,076
---------- ---------- ----------
Net increase in net assets........................... 42,014,048 26,745,481 19,656,469
Net assets:
Beginning of year.................................... 64,558,379 37,812,898 18,156,429
---------- ---------- ----------
End of year..........................................$106,572,427 $64,558,379 $37,812,898
============ =========== ===========
</TABLE>
See Notes to Financial Statements.
PAGE
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Accounting Policies
Templeton Capital Accumulation Plans (the "Plan") is a unit investment trust
registered under the Investment Company Act of 1940. The Plan invests only in
shares of Templeton Capital Accumulator Fund, Inc. (the "Fund"). The following
is a summary of the significant accounting policies followed in the preparation
of its financial statements.
a. Valuation of securities. The Plan's investments in the Fund are valued at
the net asset value of Fund shares held.
b. Income taxes. No provision is made for Federal income taxes. The Internal
Revenue Code provides that the Plan is not treated as a separate taxable
entity; rather the Planholders are treated as directly owning the Fund's
shares accumulated in their accounts.
c. Other. Fund share transactions are recorded on the trade date. Dividend
income and capital gain distributions are recorded on the ex-dividend
date. The cost of the Plan's investment in Fund shares is computed using
the average cost method and gain or loss on redemption of Fund shares is
computed using this method.
d. Accounting Estimates. The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of
income and expense during the reporting period. Actual results could differ
from those estimates.
Note 2. Transactions in Fund Shares
Effective March 27, 1996, the shares of the Fund were split on a 2-for-1 basis.
As of August 31, 1996, the Plan held 11,739,637 shares of the Fund. Transactions
in Fund shares for the years ended August 31, 1996, 1995 and 1994 were as
follows:
PAGE
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ---
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
<S> <C> <C> <C> <C> <C> <C>
Planholder payments.................. $39,848,219 $33,284,142 $19,886,896
Less-sales charges................... 5,671,439 6,526,442 3,832,783
Balance invested in Fund shares...... 34,176,780 2,870,915 26,757,700 1,748,783 16,054,113 1,072,509
Distributions reinvested in Fund shares 1,597,227 102,037 2,015,029 133,499 472,194 33,224
Redemption and withdrawals in Fund
shares (4,905,220) (413,497) (2,450,509) (165,571) (1,497,231) (94,041)
Shares issued on 2-for-1stock split.. 5,130,349 --- --- --- ---
---------- -------- ---------- ---------- --------- ---------
$30,868,787 7,689,804 $26,322,220 1,716,711 $15,029,076 1,011,692
=========== ========= =========== ========= ============ ==========
</TABLE>
Note 3. Sponsor and Custodian
Franklin Templeton Distributors, Inc., as Sponsor of the Plan received net
sales and creation charges, after commissions paid to authorized brokers and
dealers, of $610,774, $575,554, and $336,780 for the years ended August 31,
1996, 1995 and 1994, respectively. Expenses of operating the Plan are paid by
the Sponsor. Templeton Funds Trust Company ("TFTC") serves as Custodian. No
other compensation is paid by the Plan to either the Sponsor or the Custodian
except that Franklin Templeton Trust Company receives a $10 annual service fee
from each retirement plan account established by planholders.
Note 4. Source of Net Assets
The Plan's net assets as of August 31, 1996 were composed of the following
amounts:
Amount paid in by planholders, net of sales and creation charges... $93,137,415
Distributions reinvested........................................... 4,406,741
Payment of redemption proceeds to planholders...................... (10,745,766)
Accumulated gain on Plan terminations.............................. 1,333,024
Unrealized appreciation of investments............................. 18,441,013
-----------
Net assets applicable to planholders...............................$106,572,427
=============
PAGE
REPORT OF INDEPENDENT ACCOUNTANTS
Franklin/Templeton Distributors, Inc.:
We have audited the accompanying statement of financial condition of
Franklin/Templeton Distributors, Inc. (a wholly-owned subsidiary of Franklin
Resources, Inc.) as of September 30, 1996, and the related statements of income,
stockholder's equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Franklin/Templeton
Distributors, Inc. as of September 30, 1996, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The information on pages 9 and 10 is
presented for purposes of additional analysis and is not a required part of the
basic financial statements, but is supplementary information required by Rule
17a-5 of the Securities and Exchange Commission. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
Coopers & Lybrand L.L.P.
San Francisco, California
November 15, 1996
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF FINANCIAL CONDITION
SEPTEMBER 30, 1996
ASSETS
Cash and cash equivalents..................................... $27,968,074
Underwriting and distribution fees receivable from
Franklin Templeton Group of Funds............................ 26,175,695
Deferred sales commissions, net............................... 14,633,937
Property and equipment, at cost (net of accumulated
depreciation of ($3,042,214)................................ 3,057,219
Other ........................................................ 4,476,761
-------------
Total assets............................................ $76,311,686
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Underwriting and distribution fees payable to dealers......... $22,585,200
Trade payables and accrued expenses........................... 10,015,308
Due to affiliates............................................. 5,890,403
-----------
Total liabilities....................................... 38,490,911
----------
Commitments (Note 3)
Stockholder's equity:
Common stock, $1.00 par value, 20,000 shares authorized;
2,355 shares issued and outstanding........................... 2,355
Capital in excess of par value.................................. 150,564,072
Accumulated deficit............................................. (112,745,652)
Total stockholder's equity...................................... 37,820,775
------------
............................................................ $76,311,686
===========
The accompanying notes are an integral part of these financial statements.
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 1996
------------
Revenues:
Underwriting and distribution fees.............................. $517,338,001
Investment and other income..................................... 2,064,669
----------
Total revenues.................................................. 519,402,670
-----------
Expenses:
Underwriting and distribution................................... 473,022,874
Employee compensation and benefits.............................. 51,046,782
Advertising and promotion....................................... 48,678,721
General and administrative...................................... 30,288,544
-------------
Total expenses.................................................. 603,036,921
-------------
Net loss......................................................... $(83,634,251)
=============
The accompanying notes are an integral part of these financial statements.
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 1996
------------
<TABLE>
<CAPTION>
CAPITAL IN TOTAL
COMMON STOCK EXCESS OF RETAINED STOCKHOLDER'S
PAR VALUE AMOUNT PAR VALUE EARNINGS EQUITY
<S> <C> <C> <C> <C> <C>
Balance, October 1, 1995............ 2,355 $2,355 $80,564,072 $(29,111,401) $51,455,026
Parent capital contribution......... - - 70,000,000 - 70,000,000
Net loss............................ - - - (83,634,251) (83,634,251)
- ------------ ------------
Balance, September 30, 1996......... 2,355 $2,355 $150,564,072 $(112,745,652) $37,820,775
===== ====== ============= ============= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1996
Net loss........................................................ $(83,634,251)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation.................................................... 666,493
Amortization of deferred sales commissions...................... 16,386,676
Increase in underwriting and distribution fees receivable....... (5,792,721)
Increase in deferred sales commissions, net...................... (25,950,921)
Decrease in prepaid and other.................................... (2,224,854)
Increase in underwriting and distribution fees payable to brokers. 5,066,239
Increase in trade payables and accrued expenses................... 7,483,249
---------
Net cash used in operating activities............................. (88,000,090)
------------
Purchases of furniture and equipment............................. (1,586,496)
-----------
Net cash used in investing activities............................ (1,586,496)
-----------
Advances from parent............................................. 88,965,082
----------
Net cash provided by financing activities........................ 88,965,082
----------
Decrease in cash and cash equivalents.......................... (2,621,504)
Cash and cash equivalents, beginning of year................... 30,589,578
----------
Cash and cash equivalents, end of year........................ $27,968,074
===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest...................................................... $11,409
=======
Supplemental disclosure of non-cash investing and financing activities: The
Company received a $70,000,000 capital contribution from its parent, through a
noncash reduction in the intercompany payable to its parent.
The accompanying notes are an integral part of these financial statements.
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS:
Franklin/Templeton Distributors, Inc. (the Company) is registered with the
Securities and Exchange Commission as a broker dealer and serves as the
principal underwriter for the Franklin Templeton Group of Funds. The
Company is a wholly-owned subsidiary of Franklin Resources, Inc.(Parent).
2. SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
These financial statements are prepared in accordance with generally
accepted accounting principals which require the use of estimates made by
management.
REVENUE RECOGNITION:
Underwriting commissions on mutual fund shares sales are recognized when the
share sales are traded. Other distribution fees are accrued as earned.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents consist of demand deposits with bank and amounts
held in a money market fund for which an affiliated company acts as investment
advisor. Due to the relatively short-term nature of these instruments, the
carrying value approximates fair value.
DEFERRED SALES COMMISSION:
Sales commissions paid to brokers in connection with Class II open-end
Franklin Templeton funds are deferred and amortized on a straight-line basis
over a period of up to eighteen months.
ALLOCATION OF INTERCOMPANY COSTS:
Certain management, accounting and other administrative costs are allocated
to the Company by its affiliates.
INCOME TAXES:
The Company is included in the consolidated federal and combined California
state income tax returns of its Parent. The Parent allocates federal and
California state income taxes to the Company using the separate return method.
The Parent has not allocated tax benefits arising from its net operating losses
to the Company.
2. SIGNIFICANT ACCOUNTING POLICIES, continued:
INCOME TAXES, continued:
Deferred income taxes reflect the impact of temporary differences between
amounts of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws. Deferred tax assets and liabilities are
adjusted to reflect changes in tax rates or other provisions of the tax law in
the period in which a new tax law is enacted.
Deferred taxes as of September 30, 1996 relate primarily to depreciation on
fixed assets, bonus accrual, and deferred compensation. As the Parent does not
allocate to the Company tax benefits arising from its net operating losses, a
valuation allowance has been recognized for the entire deferred amounts.
PROPERTY AND EQUIPMENT:
Property and equipment are recorded at cost and are depreciated on the
straight-line basis over their estimated useful lives. Expenditures for repairs
and maintenance are charged to expense when incurred.
3. COMMITMENTS:
The Parent leases computer, automobile and office equipment and office space
under various agreements expiring at various dates through 1997 which are
accounted for as operating leases. The Company is the direct beneficiary of
these leases and consequently is responsible for payment of the various lease
commitments. Total lease expense for the year amounted to $467,539. At September
30, 1996, remaining operating lease commitments are as follows:
1997............................ $453,787
1998............................ 107,576
1999............................ 23,144
2000............................ 23,782
2001............................ 16,137
------
................................ $624,426
========
4. EMPLOYEE BENEFIT AND INCENTIVE PLANS:
The Parent sponsors contribution profit sharing plans covering substantially
all employees of the Parent and its U.S. Subsidiaries. The plans are funded on
an annual basis as determined by the Board of Directors of its Parent. The
Company's portion of expense for the plan for the year ended September 30, 1996
was $4,393,921.
The Parent sponsors restricted stock arrangements for certain employees of
the Parent and its U.S. Subsidiaries, pursuant to which the Parent has issued
shares of its common stock in the names of the employees. The company's portion
of expense for the plan for the year ended September 30, 1996 was $3,601,159.
5. RELATED PARTY TRANSACTION:
For the year ended September 30, 1996, the Company was allocated $20,938,020
of administrative service costs by its Parent.
6. NET CAPITAL REQUIREMENT:
The Company is subject to the net capital rule (Rule 15c3-1) of the
Securities and Exchange Commission. In accordance with Rule 15c3-1, the Company
is required to maintain a minimum net capital of $50,000 and to maintain a ratio
of aggregate indebtedness to net capital, both as defined, not in excess of 15
to 1. Rule 15c3-1 also provides that equity capital may not be withdrawn or cash
dividends paid if the resulting indebtedness to net capital ratio would exceed
10 to 1. At September 30, 1996, the Company had net capital of $9,416,652 which
was $6,850,591 in excess of its required net capital of $2,556,061. The
Company's ratio of aggregate indebtedness to net capital was 4.09 to 1.
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
COMPUTATION OF NET CAPITAL
PURSUANT TO RULE 15C3-1
SEPTEMBER 30, 1996
SCHEDULE I
Total stockholder's equity from statement of financial condition.. $37,820,775
Deduct nonallowable assets:
Receivable from Franklin Templeton Group of Funds $ 5,854,048
Prepaid expenses and other 18,840,166
Property and equipment, net 3,057,219
...................................................................(27,751,433)
Other deductions................................................... (652,690)
Net capital........................................................$ 9,416,652
===========
Aggregate indebtedness:
Underwriting and distribution fees payable to brokers............ 22,585,200
Trade payables and accrued expenses.............................. 10,015,308
Due to affiliates................................................ 5,890,403
---------
Total aggregate indebtedness.................................. $38,490,911
===========
Computation of basic net capital requirement:
Minimum net capital required (6-2/3% of aggregate indebtedness)....$ 2,566,061
Excess net capital.................................................$ 6,850,591
Ratio of aggregate indebtedness to net capital.................. 4.09 to 1
============
There were no material differences in the computation of net capital under Rule
15c3-1, as shown in the audited financial statements, with the Company's
corresponding unaudited Part IIA filed for the period ended September 30, 1996.
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT PURSUANT TO RULE 15C3-1
SEPTEMBER 30, 1996
SCHEDULE II
The Company is currently exempt from the requirement to maintain a "Special
Reserve account for the Exclusive Benefit of Customers" under provision of SEC
Rule 15c3-1 based upon Paragraph K(2)(B) of the Rule.
STATEMENT REGARDING LIABILITIES SUBORDINATED
TO CLAIMS OF GENERAL CREDITORS
September 30, 1996
For the period ended September 30, 1996, the Company did not have any
liabilities subordinated to claims of general creditors.
